The oil majors are safe from divestments from the world’s largest wealth fund — for now.
Plans presented last week by the Norwegian government to get the fund out of smaller oil and gas explorers were broadly welcomed by the country’s politicians, but are also being seized upon as an opening to further pressure oil majors such Royal Dutch Shell Plc.
One opposition party called it a mere “first step” that will raise the pressure to accelerate spending on renewable energy, or face possible divestment.
“We are showing we’re serious about divesting,” said Kari Elisabeth Kaski, a member of Parliament for the Socialist Left Party who sits on the Finance Committee. “We need to keep working to tighten and follow up on this.”
The Conservative-led government on Friday decided on much narrower divestments than the fund itself proposed as a way to reduce the petroleum-producing country’s overall exposure to oil prices. The fund will sell about $7.5 billion of stocks in companies involved solely in exploration and production, sparing huge energy groups such as Shell and Total SA.
The government argued that these companies are now raising investments in renewable energy and that it would be a shame if the wealth fund missed out on this.
The government holds a majority in parliament, meaning it can push through its proposal.
Kaski said her party plans to introduce amendments setting expectations for integrated companies’ investments in renewables, but doesn’t have high hopes of seeing them adopted.
‘Pandora’s Box’
But Norway’s political balance could shift after the next general election in 2021. The opposition Labor Party, already the country’s biggest political group and likely to lead any new government, had supported the fund’s full divestment from oil and gas.
Labor lawmaker Svein Roald Hansen said on Friday he didn’t wish to “anticipate” any future changes, but that he couldn’t “exclude” them. He wasn’t immediately available to comment on Monday.
Knut Anton Mork, an economics professor who had backed the fund’s full-divestment proposal, said the government’s initial step was likely to be deepened as soon as the next parliamentary term.
“Critics would probably say that Pandora’s box has been opened,” he said by phone on Tuesday. “The discussions will go on, just like we’ve discussed ethical investment overall for a long time.”
Government Dissonance
The Christian Democrats, a junior member of the government and early backer of divestment, said setting exact requirements for oil companies’ energy mix would be a breach of the fund’s current management model. Yet legislator Tore Storehaug also said the big integrated companies would be “wise” to take note of how Norway is trying to diversify its wealth.
The government’s insistence that divestment is solely a matter of managing financial risk is even being challenged from within: Climate and Environment Minister Ola Elvestuen, a member of the Liberal Party, on Friday hailed the divestment plan as the “most important climate decision” the four-party coalition had agreed on.
For its part, the Conservative Party repeated past warnings that the fund shouldn’t be used as a political tool.
“It’s an investment fund,” said lawmaker Henrik Asheim, who chairs the Finance Committee. “We’re doing this only out of risk considerations, not to contribute to more renewable energy. We can do that in other ways.”
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